In his last blog for 2015, John Symond gives his 2016 property market predictions.
A: After a surge in growth of 15 per cent and 12 per cent respectively over the last year in the property markets of Australia’s largest cities, Sydney and Melbourne, I believe both are headed for a welcome cooling off period in 2016.
Property prices actually slipped in five of the eight Australian capital cities during November, according to CoreLogic RP Data, and there are signs this trend may continue despite the Reserve Bank again holding the cash rate at its current low level in December.
There will be hot spots in the market – particularly inner-city suburbs – where demand will continue to outstrip supply.
Many expect that rates will continue to be at their historic low levels well into 2016, as there will be continuing uncertainty in global markets, combined with a weaker Australian dollar, subdued GDP growth and patchy consumer and business confidence.
Next year should provide buyers with a bit more breathing space to relax and take their time choosing the best house or apartment for their needs and aspirations, following the recent auction frenzy which saw prices rocket in the eastern states’ capital cities.
Research shows that outside of interest rates, the flexibility to make overpayments and ability to use a redraw and/or an offset account are the most important factors in choosing the right home loan, which is reflective of the current low rate environment as people try to get ahead on their mortgage repayments while rates are low.
While 2016 will continue to feature global uncertainty and slow economic growth, green shoots are appearing in the non-mining sector. When combined with improving unemployment levels, continuing foreign investment and low interest rates, the housing market should remain in a healthy state.
This is the last Dear John for 2015. If you have a question for John please leave it in the comments below and check back in the New Year to see if it’s been answered!